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- 15. Which statement(s) is incorrect? * -Income summary account is closed directly to capital account if the intention of the partners is to make profit or loss part of permanent capital. -Beginning capital refers to the initial investment of a partner upon formation of the partnership. -A capitalist-industrial partner shares on the partnership profits as well as on partnership losses. -The salary to partners and/or interest on their capital is still distributed in accordance with what has been agreed upon by the partners even if the net income is not adequate, unless the partners include a qualifying clause to that effect. -answer not givenThe difference between a general partner (GP) and a limited partner (LP) from below is? A limited partner is restricted in the amount they can invest in the fund, while a general partner can invest as much as they want The limited partner provides investment capital, and the general partner invests on behalf of the limited partner The general partner provides investment capital, and the limited partner invests on behalf of the general partner Limited partners cannot invest in venture capital, due to SEC regulations, whereas general partners have sufficient capital reserves to be exemptedI. Write TRUE is the statement is TRUE and write FALSE if the statement is incorrect. 4. In the partnership books, there are as many capital and drawing accounts as there are partners. 5. A partner's contribution in the form of noncash asset should be recorded at its fai market value even if there is agreed capital. 6. A partnership is much easier and less expensive to organize than a corporation.
- 1. For the risk-return principle implies that the riskier a given course of action, the higherthe expected return must be. (T) (F)2. General partners have unrestricted transferability of ownership, while limited partnersmust have the consent of all partners to transfer their ownership. (T) (F)3. Owners must register and pay yearly fees to their State of residence when establishinga sole proprietorship. (T) (F)4. The purpose of financial markets is to bring borrowers and savers together. (T) (F)5. In Financial markets, borrowers and lenders most both be located in the same country. (T) (F)6. Beginning cash balance + cash flow from operations + cash flow from investingactivities + cash flow from financing activities = ending cash balance. (T) (F)7. On a common size balance sheet, total assets are equal to 100%. (T) (F)8. The income statement shows a company's earnings since it has been in business. (T) (F)9. The balance includes information about the company's assets and liabilities. (T)…1.Discuss the advantages and disadvantages of creating a partnership and say why the company format was chosen instead. 2.Discuss whether or not the creation of a partnership could hamper their ability to borrow to fund their operations. 3.Discuss he advantages and disadvantages of forming a company. 4.Discuss whether they should form a public or private company and whether the company should be unlimited or limited. If you suggest that the company should be unlimited, should the company be limited by shares or by guarantee. Give reasons for the type of company chosen. 5.Discuss how the creation of a company may impact the ability of MM, AA, BB and SS to borrow money to fund their operations. 6.Describe and discuss two (2) corporate governance theories that may assist MM, AA, BB and SS in running their business. 7.Discuss how MM, AA, BB and SS may approach the appointment of Directors to their company and whether or not any or all of them should become Directors given their…Which of the following is CORRECT? a. One advantage of operating a business as a corppration is that stockholders can deduct their pro rata share of the taxes the firm pays, thereby eliminating the double taxation investors would face in partnership. b. Because bankruptcy requires that corporate bondholders be paid in full before stockholders receive anything, bondholders generally prefer to see corporate managers invest in high risk high return project rather than low risk low return. c. Since bondholders receive fixed payments, they do not share in the gains if risky projects turn out to be highly successful. However they do share in the losses if risky projects fail and drive the firm into bankruptcy. Therefore, bondholders generally prefer to see corporate managers invest in low risk low return projects rather than high risk high return project. d. One drawback of forming a corporation is that you lose the limited liability that you would otherwise receive as a proprietor. e.…
- Required1. Given the stated fair values, if Rowe were to sell one-half of her interest in capital to someone outside the partnership, what would be a suggested asking price? 2. Given the stated fair values, if a third party were to convey assets to the partnership in exchange for a 40% interest in the partnership, what would the value of those assets have to be? 3. Assume a new partner was admitted to the partnership with a 40% interest in capital in exchange for a cash contribution of $60,000. What would Rowe’s capital balance be as a result of this transaction, assuming use of the bonus method? 4. Given the facts of (3) above, what would Rowe’s capital balance be, assuming use of the goodwill method? 5. Assume a new partner was admitted to the partnership with a 30% interest in capital in exchange for a contribution of $55,000 of net tangible assets. What would the new partner’s capital balance be as a result of this transaction, assuming use of the bonus method?Triple G Company, Ltd. Is composed of G1, G2 and G3 as general partners, and L as limited partner. The firm owes C, a third person, P60,000, and L, P30,000. Which is not a true statement? A. If the firm owns a certain lot, L cannot receive or hold such lot by way of mortgage, to secure his claim against the partnership. B. If the firm owns a certain lot, L can receive or hold such lot by way of mortgage, to secure his claim against the partnership. C. If the firm has assets of P70,000. L cannot receive any payment for his claim of P30,000 either from the firm or from any of the three general partners because the firm’s remaining assets would only be P40,000, which amount is not sufficient to pay the firm’s debt to C in the amount of P60,000. D. If the firm owes C P60,000 and has assets of P70,000 including a receivable from L in the amount of P30,000, L cannot obtain a release from his liability to the prejudice of C since the firm’s remaining…Choose the correct. Which of the following is not a reason for the popularity of partnerships as a legal form for businesses?a. Partnerships may be formed merely by an oral agreement.b. Partnerships can more easily generate significant amounts of capital.c. Partnerships avoid the double taxation of income that is found in corporations.d. In some cases, losses may be used to offset gains for tax purposes.
- Which of the following statements is CORRECT? a. A major disadvantage of all partnerships compared to all corporations is the fact that federal income taxes must be paid by the partners rather than by the firm itself. b. A slow-growth company, with little need for new capital, would be more likely to organize as a corporation than would a faster growing company. c. Attracting large amounts of capital is more difficult for partnerships than for corporations because of such factors as unlimited liability, the need to reorganize when a partner dies, and the illiquidity (difficulty buying and selling) of partnership interests. d. In a regular partnership, liability for other partners' misdeeds is limited to the amount of a particular partner's investment in the business. e. The limited partners in a limited partnership have voting control, while the general partner has operating control over the business. Also, the limited…Which of the following is a disadvantage of the partnership form of organization? A. limited life B. no taxation at the partnership level C. flexibility in business operations D. combining of financial resourcesWhich of the following statements is most true? a. The liability for other partners’ wrong doings is limited to the amount a particular partner has invested in the partnership. b. Partnerships are formed in accordance with specific guidelines that include the filing of a formal written agreement to the government. c. A fast growing firm would be more probable to establish a partnership as its business form than would a slow growing firm. d.Corporations can easier attract investors than those of the partnership and sole proprietor businesses.